By a Newsnet reporter
One of Scotland’s most respected economists has responded to comments made by Sir Ian Wood after the retired tycoon criticised the Scottish Government’s estimate over the amount of North Sea oil still to be extracted from Scottish waters.
Sir Donald MacKay has publicly backed Scottish Government estimates on the economy and North Sea oil and said forecasts criticised by Sir Ian were backed by the oil and gas industry.
On Wednesday oil tycoon Sir Ian Wood intervened in the independence referendum and said figures used by the Scottish Government in its estimates of future North Sea reserves were too high. Sir Ian also accused others of having distorted conclusions contained in a report he himself had published in February.
However responding today, Sir Donald MacKay challenged the accusation that forecast figures had been distorted.
He said: “In forecasting output, the first source I looked at was the Wood review in which Ian Wood states that ‘a number of larger new fields are about to come on stream in the next two or three years and that could take production back to the level of two to three years ago’.
“Similar forecasts have been made by Oil and Gas UK and by Professor Alex Kemp and I have taken the former forward through my calculations.”
In a report published by Sir Ian Wood in February, the No supporter urged companies to cooperate in order to maximise output from the North Sea. His report concluded that “full implementation of the recommendations in this report … will put the UK in a much stronger position to get closer to the 24bn boe potential.”
However on Wednesday the retired tycoon appeared to distance himself from his own report and said suggestions that there were 24bn barrels of oil left were a “distortion” adding that in his view the true figure was no more than 16.5bn barrels.
The tycoon’s intervention followed criticism of the UK Government by several leading figures over what many believe to be the deliberate downplaying of the value of future Scottish oil and gas reserves.
Last month Sir Donald MacKay questioned the UK Treasury’s oil and gas forecasts, arguing that Westminster’s calculations are ill-informed and “wide of the mark”.
In an article published by the Times newspaper, Sir Donald said there was “no hole in the Scottish government’s oil predictions”.
The former Chairman of Scottish Enterprise, who also founded an oil company, criticised forecasts made by the London based Office for Budget Responsibility (OBR) for the UK Government. Sir Donald said there was a “mountain of black gold missing” missing from oil forecasts published by the UK Treasury.
In his statement today, Sir Donald repeated his criticism of the OBR and said:
“The result in output in the first five years from 2014-15 is much greater than that anticipated by OBR who, contrary to the views of the industry, predict a continuing fall in output right through to 2018-2020.
“Therefore that is a major factor in predicting much more substantial oil tax revenues than those predicted by OBR.
“The point is that Scotland will begin life as an independent nation in a better fiscal position relative to the UK. An independent Scotland should use that financial advantage to invest in re-engineering our economy towards industrial, manufacturing and trade-able services development.
“Within this fiscal framework the Scottish Government should be able to deliver the major economic programmes contained in their White Paper.”
Sir Donald was an Economic Adviser to successive Labour and Conservative Secretaries of State for Scotland for over 25 years. His views will add weight to arguments in favour of a Yes vote.
The issue of oil leapt to the front of the independence debate after reports of significant new discoveries to the west of Shetland. The Clair Ridge field has already been described by oil giant BP as “massive”.
Days after the field hit the news, another field to the west of the islands was confirmed as having the potential to generate over 700 million barrels of oil. The Bentley Field, which is due to be drilled by Xcite Energy, has up to 777 million barrels of oil reserves, the company revealed.
The discovery was describe as one of the biggest in decades and will see an estimated 57,000 barrels of oil per day produced.
Last weekend it was announced that potentially massive oil reserves off of the west coast of Scotland are to be examined after the Scottish Government announced it is to set up a review along with top academics and experts.
The area which includes the north and west coast of Shetland down to through the Hebrides and into the Firth of Clyde will be the subject of a review in order to determine the true scale of the oil and gas reserves.